As soon as we see the term Business Intelligence (BI), we assume it to be a Management Information System (MIS). So, is it really true that BI and MIS are one and the same? Definitely not, but they are similar – MIS being a subset of BI. So, we know that BI consists of information which is more than an MIS would hold. Other subsets of BI are predictive analysis, online analytical processing (OLAP), data mining, reporting, etc.
Now the questions that would arise are: what all does Business Intelligence account for, where it is used and what are its benefits?
Business Intelligence
Business Intelligence as the term states is an Intelligent Information that helps in taking intelligent decision to sustain and improve the Business of an Organization. An important aspect of an organization is, to capture all the relevant data needed for the Business to take an intelligent decision. For this, the Organization must have a strong system in place to capture and report the data in appropriate format, without which it will be difficult to make the right decision.
Because an organization having BI system has a competitive edge over its rival, it is important to have a very strong and robust BI system which is efficient and represent the factual Business information of an Organization. Therefore, lot of importance should be placed on building a BI system.
Business Intelligence is usually only used in large organizations, because the implementation of BI system would cost a lot. A smaller organization would not have to process huge information for making business decisions and therefore can manage with a simple MIS.
Implementation Approach
Since a BI system should capture and report analytical information in a format that can be easily inferred by the Top Management to take Business decision, it is imperative that Top Management has a strong implementation plan. We can adopt a strategy similar to that of a Six Sigma DMADV process.
To start the process, it is important to analyze if a BI system is indeed necessary for the organization. Once the need is ascertained, study all the processes completely and define the desired, consistent information to be captured along with the reporting format.
During this process, it is important to have regular review with all the process stakeholders and then with the Top Management. This will ensure that the process requirements being captured are correctly defined and agreed by the stakeholders and also the Top Management Review will help in moving the Project in right pace by addressing all the bottlenecks on time.
The Top Management should be insightful to ensure that the project is moving in the right direction and demanding as the implementation costs would keep increasing because of any delays. For this, the Top Management can have an expert reviewer who can act as their representative in taking appropriate decisions.
The BI system should be tested for completeness, accuracy and timely availability of the information. While designing the BI system, it should be ensured that it does not burden the employees operating downstream of the operations. The success of the BI system lies on the ease of its use by the operators and the kind of information captured. An efficient BI system will employ Lean principles and eliminate repetitive information being captured in the system which increases the implementation cost.
For e.g., information on a particular transaction being captured by an operator in one module and similar information being captured by a Quality Auditor to report the quality of the transaction in a separate module. This will result in an inefficient system which may require longer time when building subsequent reporting or performing a predictive analysis.
Once you have the BI system implemented in the process, it should ideally capture all the performance data and compare it with the Industry Benchmark data as it is one of the factors important in making Business Decisions. It should have all the features that are aligned with the Business vision of an organization.
Benefits of Business Intelligence System
We would definitely want to weigh the benefits of the BI system due to the cost factors and see how the same can be mapped to Return on Investment (RoI).
- It helps in standardizing/streamlining multiple processes and its metrics – by adopting lean principles. This will help in optimizing costs across multiple processes in a single leap.
- Action triggering information reporting, which has to be addressed immediately as the business may get impacted.
- Client confidence which would result in more direct business. It is difficult to ascertain the revenue benefit in this case as clients would also look into other factors that they would like to have in an organization. So, to realize revenue due to BI, a percentage due to BI can be ascertained during the Business Case during Project bidding.
- A competitive comparison on the performance of an organization against their competitors helping them to take appropriate decisions to build up their business.
We can clearly see here that the BI system may not be directly linked with the realization of revenue and it will be difficult to capture the ROI and if the revenue benefits have to be reported, then the means through which it would result in revenue should be predefined and a percentage factored based on the business needs as and when defined by the clients.